NEA, a Silicon Valley-based venture capital firm, has recently raised over $468 million for its NEA Secondary Opportunity Fund. The fund closed on July 3 and attracted investments from more than 60 limited partners, including the San Francisco Employees’ Retirement System. This new fundraise marks NEA’s return to the secondaries market, an asset class that involves purchasing existing stakes in companies or other funds.
Although NEA had previously been involved in the secondaries market, it spun out its secondaries practice in 2018 due to regulatory limitations. However, NEA became a registered investment advisor in 2023, allowing it to reenter the secondaries market with an in-house fund. Ravi Viswanathan, an NEA investor for nearly 15 years, now heads the spun-out entity called NewView Capital.
The timing of NEA’s reentry into the secondaries market is favorable, as there has been significant investment activity in this space. In the first half of 2024, more than $706 million was invested in direct secondaries deals, indicating a potential surpassing of last year’s $1.1 billion trading volume. Investors are pursuing secondaries deals through various means, including traditional purchasing of shares with company consent, raising special purpose vehicles (SPVs), and even investing in other firms’ SPVs.
NEA is not alone in raising funds dedicated to buying secondary shares. StepStone recently raised a record-breaking $3.3 billion for the largest venture secondaries fund, while G Squared and Industry Ventures have also raised substantial amounts for their respective secondaries strategies. This trend highlights the growing interest in the secondaries market and the potential for significant returns.
The return of NEA to the secondaries market and the increased investment activity in this space demonstrate the attractiveness of buying existing stakes in companies and funds. With NEA’s experience and the capital raised, the firm is well-positioned to capitalize on the opportunities presented by the secondaries market. As the year progresses, it will be interesting to see how NEA and other firms navigate this evolving landscape and generate returns for their investors.